The government has announced allocation of Rs 83,000 crore for defence budget for 2005-06. This translates into 8% increase over the budget for the current year and is not expected to stabilise defence spending even at the current low GDP level of 2.49%.
According to defence analysts, the hike may not be enough to buy 126 new fighter aircraft for the Indian Air Force (IAF) at the cost of $26 million per piece and the French ‘Scorpene’ submarines for the Indian Navy.
In the Union Budget announced on Monday, finance minister P Chidambaram set annual military expenditure at Rs 83,000 crore, which is nearly 17% up from previous year’s Rs 77,000 crore. Institute for Defence Studies and Analysis (IDSA) director Commodore C Uday Bhaskar told FE: “If you were modernising the armed forces you would need a steady flow of funds. It is a bit worrying that outlay on capital in the defence budget is less than last year.”
India was expected to wrap up a long running deal this year to buy $2 billion worth six submarines from France, long range ‘Smerch’ rocket system from Russia and low-level transportable radars, all of which have been pending for more than a year with the Cabinet committee on security (CCS). According to military analyst G Balachandran, “It looks most unlikely there is going to be any big ticket acquisition this year, they haven’t accounted for it in the budget.”
More than 75% of the defence budget is spent each year on wages, pensions and maintenance of the military.
The rest is likely to go towards paying off a string of deals which were cleared in recent years including aircraft carrier Admiral Gorshkov from Russia, Phalcon radars from Israel and ‘Hawks’ advance jet trainers from Britain. The highlight of this year’s defence spending would be the steep allocation of Rs 34,472 crore made for the capital outlay. Though in real terms it marked only an increase of about Rs 1,000 crore over last year’s arms acquisition funding of Rs 33,472 crore, in actual terms it amounts to fresh allocation.